The lingering distrust and lack of confidence on insurance services providers have culminated in the establishment of claims advocacy institution to mediate between the insurers and the insuring public on claim matters, writes Ebere Nwoji
Issues bothering on claims payment and claims denials are some of the factors that have instituted distrust between insurance operators and the insuring public.
This has over the years deprived insurance managers of the much-desired patronage by Nigerian masses. In most cases, the point at which the insurers and the insured often disagree is on scope of coverage of a particular policy. For the insured, insurance cover is insurance cover any time any where and claims must be paid once there is risk irrespective of whether that particular risk is mentioned in the policy document or not.
But to the professional insurer, every policy and insurance contract has limit of coverage and claims demand and payment should be limited to that except there is extension paid for.
The above sceneries have to a large extent created a very deep distrust between members of the insuring public and insurance professionals to the extent that Nigerians at all levels hardly take insurance operators seriously neither do they see insurance services as one worth patronising.
This negative perception has over the years created a huge gap between the insurance professionals and the people they are meant to serve.
On their part, insurers have been searching for remedies through the use of dispute resolution bodies like consumer complaint bureau, alternative dispute resolution organisations.
Both National Insurance Commission (NAICOM) as the regulator and Nigeria Insurers Association on annual basis provide information on number of disputes they resolved through these bodies but the fact remains that they have to a large extent failed to bridge the distrust gap between the insured and the insurers.
The need to erase this distrust and bring both the insuring public and the insurance managers to an equilibrium point in terms of genuine claims definition and payment, spurred a former chairman Nigeria Insurers Association (NIA), Mr Gus Wiggle to action to create a forum where he recently brought together insurance consumers and practitioners to a round table to brainstorm on how to bridge the huge gap created by non payment of claims and its attendant distrust.
By his position in Nigeria insurance industry as erstwhile NIA Chairman, council member Chartered Insurance Institute of Nigeria (CIIN) as well as a member of steering committee National Insurance Summit 2015 and National Inclusion Strategy, Wiggle is in a better position to assemble insurance technocrats to such a brainstorming session which end result is targeted at wiping out this lingering distrust problem to deepen insurance penetration in Nigeria by improving patronage of the industry by Nigerian masses.
The gathering titled, 2022 Insurance Advocacy Conference with the theme, “Catalising Insurance Through Better Claims Experience,” was organised at the instance of Carefirst Consult, which has Wiggle as its principal Consultant.
In his welcome address, Wiggle raised a puzzle on whether there was so much or little distrust between the consumers and insurance companies.
He charged insurance stakeholders at the conference to unravel where the distrust emanated from or to prove it as mere imagination.
He said his organisation works like a mediator between the insured and insuring public in matters of controversial claims settlement to bring both parties to an agreement point.
Speaking, former Group General Manager Risk Management and Insurance, Nigeria National Petroleum Corporation (NNPC), Mr Odunayo Bammeke, explained the conference theme and said that it meant using claims experience to be the cause of insurance becoming a lifestyle of every potential insured.
He described claims payment as the only test of trust and gateway to earning confidence of the consumers.
He insisted that claims should be customer friendly automated or otherwise.
According to him, claims experience is what insurers sell, adding that claims statistics should be properly analysed especially rejected claims.
“It could just open up opportunity to expand product add -on offerings.
He insisted that insurers needed change of mind set moving from the default positions of all claims are potential fraud and negative profiling of certain risk/ clients, “he added.
Counseling the insurers, he said insurance underwriters should aim for higher level of self-regulation.
He also opined that claim staff should be evaluated based on turn-around time from notification to settlement and not how much the department saves the company.
He also advised the insurers to incorporate into their system customer satisfaction survey after every claims process.
On his part, Executive Director Technical and operations Leadway Assurance, Adetola Adegbayi pointed out four business trust model insurers ought to embrace as integrity, result, intent and capabilities .
She described claims ratio as the percentage of insurance claims costs that a company incurs in relation to the premiums earned in the financial year. According to her, an ideal claims ratio is considered to be between 75 and 90 percent.
She highlighted various classes of businesses insurers underwrote in 2021 and their claims ratio saying, fire insurance during the period recorded N47,888.27 billion with 72 .22 claims ratio. General Accident with Gross Premium income of N36,587.63 billion has 40.85 claims ratio.
Motor with N47, 515.23 billion has 40.13 percent claims ratio. Marine and aviation with Gross Premium income N33, 107.78 billion with 39.03 percent claims ratio. Average loss ratio incurred by the industry on fire insurance was 88.31 percent.
She explained that the loss ratio was more on industrial houses.
Adegbayi said motor loss ratio during the period stood at 39 percent showing insurers were not paying enough because either that people were not making claims or they tend to forgive a lot when accident occurs.
She said those who forgive were not probably rich enough but because they don’t have time to insist on claims processes and advised that such individuals should opt for lawyers to assist them.
Effects of Distrust
A critical examination of what is happening in the industry shows that distrust and its negative impact has over the years remained the bane of insurance sector growth.
In the past, some industry operators had put up effort to rebuild the image of the sector and give it some measure of credibility and goodwill. They did this by embarking on image laundering through publicity.
This compelled them to set up a committee tagged insurance industry image committee led by one of the elders of the industry, the late Yinka Lijadu. This did not achieve much prompting the setting up of the consumer complaint bureau by both NIA and NAICOM
The bureau was to ensure that genuine claims are paid without much argument. Both the NIA and NAICOM have the customer compliant bureau where any member of the insuring public that has unsettled claims should lodge his complaints.
According to NIA, the bureau serves as a place where displeased claimants can lodge complaints against insurance companies in Lagos.
At the inauguration of the bureau, the then NIA chairman, Mr. Olusola Ladipo-Ajayi, had identified the need to change the poor public perception of the insurance industry as a major reason for introducing the bureau.
According to him, “Over the years, incidences of unsatisfactory response to settlement of claims by underwriters seem to have contributed to the poor public perception of insurance as a financing option.
“Today, we want to shake off the yoke of the inglorious past and chart a new beginning for the insurance industry anchored on the principles of trust and utmost good faith, the basic pillars of insurance practice.”
He said that after a comprehensive review of the situation, especially as it concerned confidence building mechanisms, the NIA had come up with the idea of establishing a Customer Complaints Bureau structured to provide the needed platform for intervention in cases of dispute leading to delay or non settlement of claims.”
According to him, the objectives of the bureau are to serve as alternative dispute resolution mechanism, providing an independent opinion on disputes that might arise in any insurance transaction between members of the association and policyholders; and reducing the cost of obtaining justice in respect of insurance related matters, especially those involving members of the association.
Others, he said, include promoting good and prompt service delivery as well as bringing about trust and confidence between the insurance industry and the insuring public.
Ajayi said that the bureau would listen, discuss, answer questions, provide information, and help develop options for resolving issues that might be brought before the body.
NAICOM said its own Complaints Bureau was a unit established in accordance with section 8(a) of the National Insurance Commission Act No. 1 of 1997. It serves as an organ to which members of the public may submit complaints against insurance companies and intermediaries. The Bureau is not an alternative to the court of law, where certain disputes necessarily have to be resolved. Its findings may be related to the provision of section 8 of the National Insurance Commission Act No. 1 of 1997, which empowers the Commission to enquire into the operations of insurance companies and intermediaries.
The commission said the bureau was to handle all insurance disputes arising from insurance policies issued by registered insurers, such as undue delay in settlement of genuine claims, denial of liability, where the complainant is convinced that there is liability and other matters relating to the discharge of obligations by insurance companies and intermediaries.
Though these bureaux have been settling cases of delayed claims the problem of negative perception that emanate from claims denial has persisted, prompting an independent insurance technocrat to set up a new claims advocacy outfit tagged Carefirst Consult.
Asked to paint a picture of how the claims advocating Carefirst Consult would work, Wiggle said, “Carefirst Consult is for third parties. Over times, we have been having issues, we have been in insurance for 36 years, we have seen a trend in which there have been challenges manifesting in claims settlement. It has been more prominent during the Endsars when insurance companies reminded insurance buyers that some of the policies did not cover their exposures that was when insurance companies began to expose some of the fine prints in the policy documents to the insured.
“What riot and strike got to do with motor insurance that was when insurance companies brought out the fine prints but the issue is was the insured exposed to these fine prints?”
Wiggle noted that this was the beginning of distrust between the insurers and the insuring public.
He said First Care Consult had come in to broker alignment which has been missing between insurers and insuring public.
“For the insured, we know many a time there have been accidents on the road they have third party motor insurance but they don’t know how to go about it. This is because most of them buy third party without knowing the scope of cover. You see them roll their sleeves when accident occurs and start beating themselves so what we do is to educate them that they don’t need to do that rather they should take photograph of the accident and as long as they have insurance cover photograph your insurance cover paper I photograph my own and we contact the insurance company,” he explained.
He informed that most insurance firms now have automated help desks, which make claims filing and processing very easy.